The roof of a central Shia Muslim Imambargah collapsed after an explosion in Lakhi Dar area of Shikarpur - around 470 kilometres north of here - when worshippers had assembled for the 'Zuhr' afternoon Friday prayers, burying them.
Sindh health minister Jam Mehtab said 40 people were killed and around 50 others injured in the attack, some critically.
Private media earlier said it could be suicide bombing but it was not clear so far.
Many were trapped under the debris and hundreds of people rushed to the scene to dig out survivors.
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The explosion was heard several kilometers away. Children are also said to be among the victims.
Television footage showed chaotic scenes as people rushed to take the wounded for treatment using cars, motorbikes and rickshaws.
"It was a big explosion inside the Imambargah and was set off with a remote device. The intensity of the blast led to the roof of the make-shift building caving in completely which has led to many deaths," senior police official Abdullah Mehr said over telephone.
The blast is the latest in a rising tide of sectarian violence blighting Pakistan, where radical Sunni Muslim groups often target Shia Muslims, who form about one-fifth of the 180 million-population.
Jundullah militant group took responsibility of the attack.
"Our target was the Shia because they are our enemies," spokesman Fahad Marwat said.
The group last year parted ways with the Taliban and announced allegiance with the Islamic State militant group.
Prime Minister Nawaz Sharif condemned the blast and ordered an immediate inquiry.